2013-02-14 08:00:00 CET
2013-02-14 08:03:05 CET
REGULATED INFORMATION
Talvivaaran Kaivososakeyhtiö Oyj - Company Announcement
Talvivaara Mining Company Plc: Proposed EUR 260 million Rights Issue
Stock Exchange Release
Talvivaara Mining Company Plc
14 February 2013
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA, HONG KONG, SOUTH AFRICA OR JAPAN OR ANY
OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS SHOULD
NOT SUBSCRIBE FOR OR PURCHASE ANY SHARES OR SECURITIES REFERRED TO IN THIS
ANNOUNCEMENT EXCEPT ON THE BASIS OF INFORMATION IN THE APPLICABLE PROSPECTUS
WHICH, SUBJECT TO APPROVAL FROM THE FINNISH FINANCIAL SUPERVISORY AUTHORITY, IS
EXPECTED TO BE PUBLISHED BY TALVIVAARA IN CONNECTION WITH THE RIGHTS ISSUE.
COPIES OF THE PROSPECTUS WILL, FOLLOWING PUBLICATION AND DISTRIBUTION, BE
AVAILABLE FROM TALVIVAARA'S REGISTERED OFFICE.
Proposed EUR 260 million Rights Issue
Talvivaara Mining Company Plc ("Talvivaara" or the "Company") today announces a
proposal to raise gross proceeds of EUR 260 million through a rights issue.
Highlights
* The proposed rights issue aims to:
* Secure liquidity for continued ramp-up of operations towards full capacity;
* Provide an appropriate capital structure to enable refinancing or repayment
of short-term and medium-term indebtedness, including the convertible bonds
due in May 2013; and
* Satisfy a condition subsequent under an amended revolving credit facility
* Underwritten through a combination of irrevocable subscription commitments
from Pekka Perä, Solidium and Varma, and standby underwriting commitments
from J.P. Morgan Securities plc, Nordea Bank Finland Plc, BofA Merrill
Lynch, BNP PARIBAS and Danske Bank A/S Helsinki Branch
* Announcement of terms of the proposed rights issue expected to take place on
8 March 2013
* Amended revolving credit facility for EUR 100 million (of which EUR 70
million is drawn), which, among other things, amends the financial and
production covenants in the previous credit facility to reflect Talvivaara's
current business
* Talvivaara is convening an Extraordinary General Meeting expected to take
place on 8 March 2013 in order to obtain a resolution authorising the Board
to issue up to 26 billion new shares in the rights issue
* Interim financing arrangements agreed with Nyrstar and Cameco amounting to
EUR 12 million and USD 10 million, respectively
* Talvivaara's annual results review as well as the financial statements and
the related review of the Board for the financial year ended 31 December
2012 has also been released today
Tapani Järvinen, Chairman of Talvivaara, said:"While Talvivaara has encountered a number of significant challenges recently,
reflected in the Company's current liquidity position and the necessity of the
proposed capital raise, the Board is confident in Talvivaara's long-term
potential, with its significant sulphide nickel resources and cost effective
bioheapleaching process following ramp-up, and in the long-term fundamentals of
the nickel industry.
However, the production challenges suffered over the course of 2012 have
underlined the need to focus on stabilising and improving Talvivaara's
production processes in order to return to a sustainable ramp-up towards the
targeted full capacity of 50,000 tonnes of nickel per year. Talvivaara is
implementing a number of measures to resolve its near-term operational
challenges, but the full effect of these actions will only materialise over
time. Through the financing transactions announced today, we are putting in
place a strong capital structure to allow Talvivaara to overcome its prevailing
challenges and continue the successful ramp-up of its operations.
Furthermore, the production shortfalls Talvivaara has experienced combined with
a weak nickel price environment have resulted in a strained liquidity position,
which the Board expects to be further exacerbated in 2013 due to the production
impact caused by the prevailing water balance issues. The Board therefore
believes that Talvivaara will need to strengthen its liquidity position to
secure sufficient working capital and enable repayment or refinancing of short-
term and medium-term indebtedness, including the convertible bonds due in May
2013.
Notwithstanding prevailing operational challenges and the work required to
overcome them, the Board remains confident of Talvivaara's future as a Finnish
mining champion of international significance. The primary focus of the Board
continues to be on preserving and enhancing value for all Talvivaara's
shareholders. We are confident the proposed EUR 260 million rights issue is in
the best interests of the Company's shareholders as a whole."
Background and reasons for the rights issue
Talvivaara has faced a number of operational challenges during the ramp-up of
its operations. These challenges have resulted in Talvivaara not achieving its
original production targets for 2010, 2011 and 2012. In particular, over the
course of 2012, Talvivaara faced increasing challenges with the water balance of
the mine, as rapid snow melting in the spring and historically heavy rainfall in
the spring and summer materially increased the amount of excess water that had
been accumulating at the mine site. The challenging water balance forced
Talvivaara to temporarily cease the production of new ore as of September 2012,
diluted metal grades in leach solution leading to reduced metals production and
culminated in a leakage of the gypsum pond in November 2012.
These issues have underlined the need to focus on stabilising and improving
Talvivaara's production processes in order to return to a sustainable ramp-up
path towards the targeted full capacity of 50,000 tonnes of nickel per year.
Talvivaara's results of operations in 2012 were further negatively affected by
the prevailing low nickel price environment. The Board believes that
Talvivaara's strained liquidity position is likely to be exacerbated in 2013 by
the production impact caused by the prevailing water balance issues as well as
the maturity of the remaining EUR 76.9 million convertible bonds due in May
2013.
Talvivaara is implementing a number of measures to overcome its near-term
operational challenges, including:
* Removing excess water from the Talvivaara mine site;
* Implementing steps to achieve a closed water circulation system;
* Improving bioheapleaching performance; and
* Further improving and maintaining the stability already achieved across
Talvivaara's production processes.
However, the full effect of these actions will only materialise over time, and
Talvivaara currently expects material production ramp-up only from the second
half of 2013. With prevailing nickel price uncertainty and expected short-term
production volumes, Talvivaara believes that it will need to strengthen its
liquidity position to secure sufficient working capital and enable repayment or
refinancing of short-term and medium-term indebtedness, including the
convertible bonds due 2013.
Talvivaara has concluded that raising additional equity is the best approach to
secure liquidity for continued ramp-up of operations towards full capacity and
achieve an appropriate capital structure to enable refinancing or repayment of
short-term and medium-term indebtedness. Receipt of the proceeds from the
proposed rights issue will also satisfy a condition subsequent under the amended
revolving credit facility as discussed below.
Interim financing arrangements
In order to ensure that it has liquidity until it receives the proceeds from the
proposed rights issue, Talvivaara has entered into amendment agreements with
Cameco and Nyrstar. Under the agreement with Cameco, the amount of the up-front
investment that Cameco is to pay to Talvivaara for the construction of the
uranium extraction facility was increased by USD 10 million to USD 70 million,
and the duration of the amendment agreement extended to 31 December 2017 and
commercial terms revised accordingly. Under the agreement with Nyrstar,
Talvivaara receives an up-front payment of EUR 12 million in return for agreeing
not to charge Nyrstar the EUR 350 per tonne extraction and processing fee on the
next 38,000 tonnes of zinc in concentrate delivered to Nyrstar as was agreed in
the original zinc in concentrate streaming agreement.
Rights issue and the amended revolving credit facility
On 13 February 2013, Talvivaara entered into the amended credit facility
agreement, which, among other things, amends the financial and production
covenants in the previous credit facility agreement to reflect Talvivaara's
current business and, therefore, reduces Talvivaara's risk in relation to
compliance with its covenants.
The proposed rights issue is conditional upon the Board proposal on the rights
issue being passed by shareholders at the Extraordinary General Meeting.
Therefore, if such resolutions are not passed at the Extraordinary General
Meeting, the proposed rights issue will not proceed. If Talvivaara does not
receive net proceeds of at least EUR 240 million from the proposed rights issue
by 30 April 2013, an event of default would immediately occur under the amended
revolving credit facility agreement. An event of default could cause a
significant portion of Talvivaara's borrowings to become repayable on demand.
Furthermore, without securing additional funds through the proposed rights
issue, Talvivaara will likely run out of cash and not be able to finance its
planned operations or repay its debts, including the convertible bonds due in
May 2013. Such events may require the sale of the Talvivaara mine, Talvivaara or
Talvivaara's 84 per cent shareholding in Talvivaara Sotkamo, which owns the
Talvivaara mine, and result in the insolvency and, ultimately, liquidation of
the Company.
Underwriting and subscription commitments
The proposed rights issue is underwritten through a combination of irrevocable
subscription commitments and standby underwriting.
The Company has received irrevocable undertakings from its three largest
shareholders, Mr Pekka Perä, Solidium and Varma Mutual Pension Insurance
Company, to vote in favour of the resolutions in respect of 104,181,306 Shares
in aggregate, representing approximately 38.3 per cent of the shares in issue on
the date of this announcement.
Mr Pekka Perä, representing approximately 20.7 per cent of the shares in issue
on the date of this announcement, has irrevocably committed to subscribe for
such number of new shares based on a total subscription price equal to (i) EUR
5 million plus (ii) 76 per cent of any net proceeds received by him from the
sale of (A) any subscription rights during the subscription period of the
proposed rights issue and (B) any shares at any time prior to the end of such
subscription period as well as agreed to a lock-up undertaking with respect to
his shares that will be in force for 90 days after the completion of the
proposed rights issue. Mr Pekka Perä has agreed to use his reasonable best
efforts to raise funds on terms that are reasonably acceptable to him, whether
through borrowing, the sale of shares, the sale of subscription rights, or other
means, in order to subscribe for new shares in excess of his commitment to
subscribe new shares based on a total subscription price of EUR 5 million
referred to above.
Solidium, representing approximately 8.9 per cent of the shares in issue on the
date of this announcement, has irrevocably committed to subscribe in full for
new shares on the basis of the subscription rights allocated to it. In addition,
Solidium has agreed to subscribe for any new shares not otherwise subscribed and
paid for pursuant to subscription rights or in the secondary subscription up to
an aggregate subscription price of EUR 30 million.
Varma Mutual Pension Insurance Company, representing approximately 8.7 per cent
of the shares in issue on the date of this announcement, has irrevocably
committed to subscribe in full for new shares on the basis of the subscription
rights allocated to it.
J.P. Morgan Securities plc, Nordea Bank Finland Plc, BofA Merrill Lynch, BNP
PARIBAS and Danske Bank A/S Helsinki Branch have entered into a standby
underwriting letter with Talvivaara pursuant to which they have severally
agreed, subject to certain terms and conditions, to underwrite the portion of
the proposed rights issue that is not subject to such shareholder commitments.
Under the standby underwriting letter, the Company has agreed to a lock-up
undertaking that will be in force for 180 days after the completion of the
proposed rights issue.
Principal terms of the rights issue
The Board expects that the terms of the proposed rights issue will be announced
on or around 8 March 2013, and the full details of the proposed rights issue,
including the terms, pricing and expected net proceeds of the proposed rights
issue, will be included in a prospectus to be published, subject to approval by
the Finnish Financial Supervisory Authority, on or around 13 March 2013.
Talvivaara expects that the proposed rights issue will seek to raise
approximately EUR 260 million in gross proceeds.
The subscription price is expected to be in euros and to be set with reference
to a discount to the theoretical ex-rights price, which will be in line with
similar rights issues undertaken in the UK and Finnish markets, and having
regard to, amongst other things, investor feedback, Talvivaara's operational
performance, market conditions, any relevant requirements of the Listing Rules
and the market price of the shares over the five days preceding the
determination of the subscription price. The number of new shares to be issued
pursuant to the proposed rights issue will be determined on the date the Board
resolves upon the proposed rights issue on the basis of the rights issue
authorisation having been approved at the Extraordinary General Meeting and will
depend on the subscription price determined at the same time by the Board. In
order for Talvivaara to proceed with the proposed rights issue, a resolution
authorising the Board to resolve to issue up to 26 billion new shares in the
rights issue will be proposed by the Board at the Extraordinary General Meeting.
Presentations for the media and investors:
Finnish language press conference on 14 February 2013 at 10:00 GMT / 12:00 EET
A Finnish language press conference on the annual results and financing
arrangements will be held on 14 February 2013 at 10:00 GMT / 12:00 EET at G.W.
Sundmans (auditorium), Helsinki, Finland.
English language presentation and live webcast on 14 February 2013 at 11:30 GMT
/ 13:30 EET
An English language combined presentation, conference call and live webcast on
the annual results and financing arrangements will be held on 14 February 2013
at 11:30 GMT / 13:30 EET.
The webcast can be accessed through the following link:
http://qsb.webcast.fi/t/talvivaara/talvivaara_2013_0214_q4/
A conference call facility is available for participants joining via telephone
and there will be a Q&A following the presentation.
Listen via teleconference:
Europe & U.K. Participants: +44 (0)20 7162 0077
US Participants: +1 334 323 6203
Finnish Participants: +358 (0)9 2313 9202
Conference ID: 928245
Further details on the event can be found on the Talvivaara website,
www.talvivaara.com. The webcast will also be available for viewing on the
Talvivaara website shortly after the event until the end of 2013.
Enquiries
Talvivaara Mining Company Plc Tel +358 20 7129 800
Pekka Perä, Chief Executive Officer
Saila Miettinen-Lähde, Deputy CEO and CFO
Talvivaara Mining Company Plc
Talvivaara Mining Company is an internationally significant base metals producer
with its primary focus on nickel and zinc using a technology known as
bioheapleaching to extract metals out of ore. Bioheapleaching makes extraction
of metals from low grade ore economically viable. The Talvivaara deposits
comprise one of the largest known sulphide nickel resources in Europe. The ore
body is estimated to support anticipated production for several decades.
Talvivaara has secured a 10-year off-take agreement for 100 per cent of its main
output of nickel and cobalt to Norilsk Nickel and entered into a long-term zinc
streaming agreement with Nyrstar NV. Talvivaara is listed on the London Stock
Exchange Main Market and NASDAQ OMX Helsinki. Further information can be found
at www.talvivaara.com.
DISCLAIMER
This announcement is an advertisement and not a prospectus and investors should
not subscribe for or purchase any shares or securities referred to in this
announcement except on the basis of information in the applicable prospectus
which, subject to approval from the Finnish Financial Supervisory Authority,
which are expected to be published by Talvivaara in connection with the proposed
rights issue. Copies of the prospectus will, following publication and
distribution, be available from Talvivaara's registered office. Nothing in this
announcement should be interpreted as a term or condition of the proposed rights
issue.
The information contained herein is not for publication or distribution,
directly or indirectly, in or into the United States, Canada, Australia, Hong
Kong, South Africa or Japan. These written materials do not constitute an offer
of securities for sale in the United States, nor may the securities be offered
or sold in the United States absent registration or an exemption from
registration as provided in the U.S. Securities Act of 1933, as amended, and the
rules and regulations thereunder. There is no intention to register any portion
of the offering in the United States or to conduct a public offering of
securities in the United States.
The issue, exercise or sale of securities in the offering are subject to
specific legal or regulatory restrictions in certain jurisdictions. Talvivaara
assumes no responsibility in the event there is a violation by any person of
such restrictions.
The information contained herein shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of the securities
referred to herein in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration, exemption from registration or
qualification under the securities laws of any such jurisdiction. Investors must
neither accept any offer for, nor acquire, any securities to which this
announcement refers, unless they do so on the basis of the information contained
in the applicable prospectus published or distributed by Talvivaara.
Talvivaara has not authorised any offer to the public of securities in any
Member State of the European Economic Area other than Finland and the United
Kingdom. With respect to each Member State of the European Economic Area other
than Finland and the United Kingdom and which has implemented the Prospectus
Directive (each, a "Relevant Member State"), no action has been undertaken or
will be undertaken to make an offer to the public of securities requiring
publication of a prospectus in any Relevant Member State. As a result, the
securities may only be offered in Relevant Member States (a) to any legal entity
which is a qualified investor as defined in the Prospectus Directive; or (b) in
any other circumstances falling within Article 3(2) of the Prospectus Directive.
For the purposes of this paragraph, the expression an "offer of securities to
the public" means the communication in any form and by any means of sufficient
information on the terms of the offer and the securities to be offered so as to
enable an investor to decide to exercise, purchase or subscribe the securities,
as the same may be varied in that Member State by any measure implementing the
Prospectus Directive in that Member State and the expression "Prospectus
Directive" means Directive 2003/71/EC (and amendments thereto, including the
2010 PD Amending Directive, to the extent implemented in the Relevant Member
State), and includes any relevant implementing measure in the Relevant Member
State and the expression "2010 PD Amending Directive" means Directive
2010/73/EU.
This communication includes forward-looking statements within the meaning of the
securities laws of certain applicable jurisdictions. These forward-looking
statements include, but are not limited to, all statements other than statements
of historical facts contained in this communication, including, without
limitation, those regarding Talvivaara's strategy, plans, objectives, goals and
targets. By their nature, forward looking statements involve known and unknown
risks, uncertainties and other factors because they relate to events and depend
on circumstances that may or may not occur in the future. Talvivaara cautions
you that forward-looking statements are not guarantees of future performance and
are based on numerous assumptions and that its actual results of operations,
including its financial condition and liquidity, may differ materially from (and
be significantly more negative than) those made in, or suggested by, the
forward-looking statements contained in this communication. In particular, this
communication includes forward-looking statements relating to Talvivaara's plans
to address the recent operational challenges faced by Talvivaara. Such estimates
are based on a number of assumptions that are, in turn, based on currently
available information and judgments based on such information. However, these
assumptions are inherently uncertain and subject to a wide variety of
significant operational and regulatory risks and uncertainties that could cause
the actual outcome of Talvivaara's actions to materially differ from those
anticipated.
No statement in this announcement is intended as a profit forecast or a profit
estimate and no statement in this announcement should be interpreted to mean
that earnings per share for the current or future financial years would
necessarily match or exceed the historical published earnings per share. Prices
and values of, and income from, shares may go down as well as up and an investor
may not get back the amount invested. It should be noted that past performance
is no guide to future performance. Persons needing advice should consult an
independent financial adviser.
J.P. Morgan Securities plc, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting as sole sponsor for
Talvivaara and no one else in connection with the proposed rights issue and will
not regard any other person (whether or not a recipient of this announcement) as
a client in relation to the proposed rights issue and will not be responsible to
anyone other than Talvivaara for providing the protections afforded to its
clients or for giving advice in connection with the proposed rights issue, the
contents of this announcement and the accompanying documents or any other
transaction, arrangement or matter referred to herein or therein.
Each of Nordea Bank Finland Plc, Merrill Lynch International, BNP PARIBAS and
Danske Bank A/S Helsinki Branch is acting exclusively for Talvivaara and for no
one else in connection with the proposed rights issue and will not regard any
other person (whether or not a recipient of this announcement) as a client in
relation to the proposed rights issue and will not be responsible to anyone
other than Talvivaara for providing the protections afforded to their respective
clients or for providing advice in connection with the proposed rights issue or
any other transaction, arrangement or matter referred to herein.
This announcement should not be considered a recommendation by any of J.P.
Morgan Securities plc, Nordea Bank Finland Plc, Merrill Lynch International, BNP
PARIBAS or Danske Bank A/S Helsinki Branch or any of their respective directors,
officers, employees, advisers or any of their respective affiliates in relation
to any purchase of or subscription for securities.
No representation or warranty, express or implied, is given by or on behalf of
any of J.P. Morgan Securities plc, Nordea Bank Finland Plc, Merrill Lynch
International, BNP PARIBAS or Danske Bank A/S Helsinki Branch or any of their
respective directors, officers, employees, advisers or any of their respective
affiliates or any other person as to the accuracy, fairness, sufficiency or
completeness of the information or the opinions or the beliefs contained in this
announcement (or any part hereof).
None of the information contained in this announcement has been independently
verified or approved by any of J.P. Morgan Securities plc, Nordea Bank Finland
Plc, Merrill Lynch International, BNP PARIBAS or Danske Bank A/S Helsinki Branch
or any of their respective directors, officers, employees, advisers or any of
their respective affiliates. Save in the case of fraud, no liability is accepted
by any of J.P. Morgan Securities plc, Nordea Bank Finland Plc, Merrill Lynch
International, BNP PARIBAS or Danske Bank A/S Helsinki Branch or any of their
respective directors, officers, employees, advisers or any of their respective
affiliates for any errors, omissions or inaccuracies in such information or
opinions or for any loss, cost or damage suffered or incurred howsoever arising,
directly or indirectly, from any use of this announcement or its contents or
otherwise in connection with this announcement.
No person has been authorised to give any information or to make any
representations other than those contained in this announcement and, if given or
made, such information or representations must not be relied on as having been
authorised by Talvivaara, any of J.P. Morgan Securities plc, Nordea Bank Finland
Plc, Merrill Lynch International, BNP PARIBAS or Danske Bank A/S Helsinki Branch
or any other person. Subject to applicable rules and regulations, the issue of
this announcement shall not, in any circumstances, create any implication that
there has been no change in the affairs of Talvivaara and its group since the
date of this announcement or that the information in it is correct as at any
subsequent date.
This communication is directed only at (i) persons who are outside the United
Kingdom or (ii) persons who have professional experience in matters relating to
investments falling within Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005 (the "Order") and (iii) high net worth
entities, and other persons to whom it may lawfully be communicated, falling
within Article 49(2) of the Order (all such persons together being referred to
as "relevant persons"). Any investment activity to which this communication
relates will only be available to and will only be engaged with, relevant
persons. Any person who is not a relevant person should not act or rely on this
announcement or any of its contents.
Neither the content of Talvivaara's website (or any other website) nor the
content of any website accessible from hyperlinks on Talvivaara's website (or
any other website) is incorporated into, or forms part of, this announcement.
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